Bitcoin Price Range Sees Further Narrowing as Volatility Drops to New Three-Week Low

Bitcoin’s price continued to stabilize on Thursday, as volatility fell to its lowest in three weeks, highlighting the lack of conviction from the bull and bear camps.

BTC/USD Update

Bitcoin is currently trading at $3,841.78 on Bitfinex as of 7:35 a.m. ET, where it was little changed compared with the previous day. Price action continues to narrow, with the 50-day moving average offering strong resistance for going on nine days. Momentum has also flat-lined, according to the MACD.

On an aggregate level, bitcoin’s price averaged $3,913.49 across all major exchanges, according to CoinMarketCap data. That represents an increase of 0.4% over the past 24 hours.

Trade volumes have moderated somewhat in recent days but remain well above the bear-market average. In the last 24 hours, more than $8.9 billion worth of BTC was exchanged on virtual currency platforms. BitMEX, a leading derivatives exchange, saw 5.3% of the daily volume. Spot markets accounted for the rest.

It is estimated that over-the-counter markets are equal to or perhaps even greater than exchange-based markets. Private bilateral contracts have also become popular among institutional traders betting on bitcoin’s short-term prospects. Read more: Bitcoin and Derivatives: Why $4,200 is So Critical.

At current values, bitcoin has a total market capitalization of $68.8 billion. Its dominance rate, or the share of the total cryptocurrency market held in bitcoin, has fallen to 51.2%. Bitcoin’s dominance rate briefly fell below 50% earlier this month. More on that story: Bitcoin Price Crosses $3,900 as Bulls Eye Re-Test of December High.

Volatility Crumbles

Bitcoin has seen a narrowing of price action for the past week-and-a-half, a fact that is well reflected in the short-term volatility index. The 30-day volatility gauge, which tracks the extent of bitcoin’s daily price fluctuations, fell on Wednesday to 2.57%, according to bitvol.info. That’s the lowest since February 23, just before volatility spiked again.

Volatility has been more or less in decline since December, with a few major exceptions.

In February, bitcoin snapped a brutal six-month losing streak by gaining more than 12%. The rally was largely concentrated in two major breakouts on February 8 and 17, respectively. The leading digital currency would eventually go on to test $4,200, the December high, before profit-taking triggered a sharp reversal.

The $4,200-$4,300 region remains the critical resistance test for the bulls. A failure to break higher could send prices backtracking all the way to $3,400, or the level that was observed prior to last month’s breakout.

Bitcoin’s tepid price movement reflects the general conditions for crypto markets as a whole. With few exceptions, i.e. Litecoin (LTC) and Binance Coin (BNB), most major cryptocurrencies have been fairly rangebound.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

 

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi